Could "Fire Ice" Change Japan's Energy Landscape?

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Japan just extracted offshore deposits of methane hydrate – sometimes called "fire ice" – and the country may be sitting on enough of it to supply its natural gas needs for a century.

That's the buzz among scientists after the announcement Tuesday that the methane hydrate had been found in the Nankai Trench, a deep-water feature that lies 50 miles south of the Atsumi Peninsula in central Japan.

This marks the first time gas from methane hydrate has been successfully retrieved from an offshore deposit, though researchers had extracted it from the permafrost of the Canadian Arctic.

For Japan, which relies on imports for most of its energy needs (and has severely cut back on nuclear energy usage after the Fukushima nuclear plant disaster), the implications of the find could be huge.

"Japan could finally have an energy source to call its own," Takami Kawamoto, a spokesman for the Japan Oil, Gas and Metals National Corp., the state-run company leading the trial extraction, told The New York Times.

Japan hopes its new source of unconventional natural gas will change its energy landscape, reducing its dependence on imported energy, just as shale gas and shale oil did for the United States.

What is Methane Hydrate?

Methane hydrate, one of the most abundant sources of natural gas on Earth, is found on or under the ocean floor and on land in permafrost.

It is essentially methane gas dissolved in water and frozen into a slush-like consistency through a combination of cold temperatures and pressure.

Most of the world's methane hydrate is found in fine sand on or under the sea floor. The methane gas is trapped in the pores of sand, often cementing the sand together and often invisible. Although this type of methane hydrate is by far the most abundant, it is unsuitable for energy use.

The methane hydrate most likely to be exploited for energy is found offshore in marine sands and onshore in Arctic sands.

Gas hydrate has also been recovered in chunks, in veins within sediments and occasionally in large masses, the U.S. Geological Survey wrote.

How much gas is there in methane hydrate worldwide?

According to the USGS, estimates range from 100,000 TCF to 100 million TCF. Even the lower estimate is equal to 4,000 years' of U.S. natural gas consumption, but the USGS warns "only a fraction of the methane sequestered in global gas hydrate deposits is likely to be concentrated enough and accessible enough to ever be considered a potential target for energy resource studies."

Challenges to Extracting Methane Hydrate

Is methane hydrate a game-changer for Japan? It could be, as the Japanese have proved natural gas can be successfully extracted from methane hydrate found under the ocean floor.

The big problem is cost. It is estimated that unless new research brings costs down, it will cost about $50 per million BTUs to extract natural gas from undersea methane hydrate.

By comparison, U.S. shale gas costs $3 per million BTUs. Gas imported to Japan is priced at about $15 per million BTUs.

But Japan really needs its own source of energy, free from the uncertainties of politics.

That's why the Japanese government is putting so much effort into developing gas from methane hydrate.

The government has set a goal of commercializing methane hydrate gas by 2018.

"Now we know that extraction is possible," Mikio Satoh, a senior researcher in marine geology at the National Institute of Advanced Industrial Science and Technology, told The New York Times. "The next step is to see how far Japan can get costs down to make the technology economically viable."

The methane hydrate extraction has already affected some companies in the Japanese stock market.

Japan Drilling Co. Ltd., which trades on the Tokyo Stock Exchange under code 1606, has been the main contractor for the methane hydrate test drilling program. Japan Drilling shares were up nearly 4% in Tokyo on Wednesday following the announcement of the successful test.

Japan Petroleum Exploration Co. Ltd., commonly known as JAPEX and trading on the Tokyo Stock Exchange under code 1662, is the operator of the test-drilling programs. Its shares rose by 5.7% Tuesday, then fell 4.8% Wednesday.

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